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CCI decided to impose a penalty of 2% of the average annual turnover for three financial years in India on Hyundai. Photo: Babu Ponnapan/Mint
CCI decided to impose a penalty of 2% of the average annual turnover for three financial years in India on Hyundai. Photo: Babu Ponnapan/Mint

CCI fines Hyundai Rs420 crore for anti-competitive practices

The South Korean carmaker was fined for violating antitrust laws in the supply of genuine spare parts and diagnostic tools

New Delhi: The Competition Commission of India (CCI) has levied a penalty of 420.26 crore on car manufacturer Hyundai Motor India Ltd for violating antitrust laws in the supply of genuine spare parts and diagnostic tools, according to an order dated 27 July and made available on its website on Tuesday.

CCI also found Mahindra Reva Electric Vehicles Pvt. Ltd, a subsidiary of Mahindra and Mahindra Ltd, and Doshi Holding Pvt. Ltd-promoted Premier in violation of competition laws.

While Hyundai was penalized 2% of its annual turnover in India for three years—2009-10, 2010-11 and 2011-12, Reva and Premier were exempted from penalties.

The regulator held that the three companies had entered agreements that adversely affected market competition and abused their dominant position in the supply of spare parts.

Genuine spare parts of automobiles manufactured by these companies were not made available in the open market, which affected services of independent mechanics to compete with authorised service stations, the CCI order said.

CCI found that Hyundai and Reva earned a high mark-up on spare parts sourced from original equipment suppliers and the price at which they were made available to consumers.

CCI also said that the designs, specifications, drawings and technologies provided by Hyundai to its equipment suppliers would not be exempted under Section 3(5) of the Competition Act, 2002, which protects exclusive rights granted under intellectual property rights.

CCI had slapped 14 other car manufacturers with fines to the tune of 2,554 crore in an order dated 25 August 2014. At that time, CCI couldn’t proceed against these three companies on account of a Madras high court stay challenging the authority and jurisdiction of the regulator.

However, the high court on 4 February confirmed CCI’s jurisdiction to look into practices of these three car manufacturers.

CCI has also asked Hyundai, Reva and Premier to cease and desist from such anti-competitive practices and devise a mechanism to make spare parts and diagnostic tools “easily available through an effective network".

The antitrust regulator ordered an investigation against several car manufacturers on the complaint of one Shamsher Kataria on 24 February 2011. In 2011, CCI allowed the director general to open investigation against 17 car manufacturers.

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